Management dependence
The first question any buyer asks is what happens to this business when the owner leaves. If the answer is that revenue, key relationships and decision-making all sit with you, the buyer will either reduce the price or tie a large part of it to your staying on. Building a second line of management, moving customer relationships across and documenting how the business actually runs are the highest-return preparation tasks available to most owners.
Revenue quality, customers and suppliers
- Customer concentration. Where one client is more than roughly a fifth of revenue, expect the buyer to protect itself through deferred payment.
- Recurring revenue. Contracted or repeating income is valued more highly than project work of the same size, because it is more likely to continue.
- Contracts. Written terms, sensible notice periods and no change-of-control clauses that let a customer walk on completion.
- Supplier dependence. Sole-source arrangements and informal supply terms are a risk a buyer will ask to see mitigated.
Financial reporting and EBITDA
Buyers price what they can verify. Monthly management accounts that reconcile to the statutory accounts, a clear gross margin by product or service line, and a working capital profile you can explain are worth more than a strong story. Adjustments to EBITDA are legitimate and expected, but every one of them needs supporting evidence before it is claimed. Any adjustment that fails in due diligence costs both value and credibility.
How UK businesses are valued explains how adjusted earnings and multiples combine, and why enterprise value is not the amount that reaches your bank account.
Not sure what a buyer would question in your business?
We can tell you in one confidential conversation, well before you go anywhere near the market.
Legal, property and people
- Corporate records. Share register, option arrangements and any shareholder agreement clean and consistent.
- Intellectual property. Owned by the company rather than by you personally, with contractor assignments in place.
- Employment. Contracts in place, key staff on sensible notice and restrictive covenants enforceable.
- Property. Lease terms, break clauses and any freehold you may want to retain and lease back to the buyer.
- Shareholder alignment. Every shareholder agreed on objectives and timing before the process starts, not during it.
Tax planning and structure
Structure decisions taken shortly before a sale are often too late to be effective. Whether shares are held personally or through a holding company, how long they have been held, and what reliefs may apply should be reviewed with your accountant early. We are not tax advisers; we work alongside yours so that the deal structure and the tax position are considered together rather than in sequence.
Data room and due diligence readiness
Assemble the information before you need it. A prepared data room shortens due diligence, reduces the number of questions and gives the buyer fewer opportunities to reopen price. The due diligence checklist sets out what to gather, and the sell-side process shows where in the timetable it is needed.
Common questions
How long does it take to prepare a business for sale?
Twelve months is a realistic target where there is work to do on management dependence, reporting or customer concentration. Six months is usually enough to get the financial information and legal housekeeping in order. Preparation shortens the process later: most deals that drift or break do so because something surfaced in due diligence that should have been dealt with beforehand.
What reduces the value of a business most?
Dependence on the owner, concentration of revenue in a small number of customers, and unreliable management information. Each tells a buyer that the earnings may not continue in the same form after completion, and buyers price uncertainty by reducing the amount paid at completion or shifting it into deferred consideration.
Should I invest in growth before selling?
Only where the benefit will be visible in the numbers before you go to market. Spending that depresses current profits without a demonstrable return usually costs more in valuation than it adds. Improvements to recurring revenue, contract quality and margin are the ones buyers pay for.
What are EBITDA adjustments?
Adjustments restate reported profit to show what the business genuinely earns on a sustainable basis: removing owner remuneration above a market salary, one-off costs, non-trading items and personal expenses run through the company. Every adjustment must be evidenced, because each one will be tested in due diligence and any that cannot be supported will be removed from the valuation.
What should be in the data room before we start?
Three years of statutory accounts and management accounts, current year trading, the customer and supplier contracts that matter, employment contracts for key staff, property documents, intellectual property records, and a clean corporate record including the share register and any shareholder agreement.